For decades, Spain, Portugal and Dubai have competed for the attention—and capital—of British property investors. In 2025, all three remain attractive, but the landscape has shifted.
From tax treatment and visa rules to political sentiment and rental potential, each destination now presents a different set of opportunities and risks.
So where should you be buying if you’re a UK-based investor looking for strong returns and long-term security?
Let’s compare.
Spain: reform clouds on the horizon
Spain remains a top choice for British second-home buyers and holiday let investors. But proposed tax changes are giving some UK landlords pause.
- Rental yield: ~4–6% in Costa del Sol, Valencia, Alicante
- Capital appreciation: Steady, ~3–5% annually in key regions
- Visa access: Golden Visa programme expected to end in 2025
- Tax changes: A proposed 100% second home tax for non-EU buyers (including Brits) is generating concern
- Local restrictions: Many regions now impose limits on short-term lets and require strict tourist rental licences
Verdict: Still attractive in popular areas like Málaga and Murcia, but investors should monitor political developments and focus on long-term lets if holiday restrictions tighten.
Portugal: golden days over – but still golden?
Portugal’s Golden Visa scheme officially closed to most property buyers in 2023, but investment interest remains high—especially in Lisbon’s outer districts, the Algarve, and emerging cities like Braga.
- Rental yield: ~3–6% depending on location
- Capital appreciation: Historically high, but cooling
- Tax perks: The NHR (Non-Habitual Resident) tax regime was scrapped in 2024, reducing tax incentives for foreigners
- Cost of entry: Still relatively affordable compared to Spain or France
- Market trend: Rising demand for long-term rentals as digital nomads and remote workers fuel demand
Verdict: Portugal remains lifestyle-friendly and investor-relevant, but the loss of tax advantages means the numbers must stack up on yield alone.
Dubai: tax-free returns, but not without risk
Dubai continues to draw British investors with promises of high rental yields, tax efficiency, and a stable dirham pegged to the US dollar. In 2025, the market is booming again—but caution is warranted.
- Rental yield: ~6–9% on new-build apartments and villas
- Capital appreciation: Can swing widely (+15% in some areas in 2024, but historically volatile)
- Tax: No income or capital gains tax, but 5% VAT on some services
- Legal framework: No freehold for foreigners in certain zones; long-distance legal processes can be complex
- Lifestyle: Favoured by expats, but stricter rules and cultural expectations apply
Verdict: Ideal for cash-rich investors looking for income and global diversification, but less suited to hands-off landlords or those prioritising capital preservation.
What should UK investors consider in 2025?
- Tax treaties: Always check whether the UK has a double taxation agreement with your target country.
- Exchange rate risk: Sterling is volatile—especially post-election. Consider hedging.
- On-the-ground management: Can you afford a trusted local agent? DIY doesn’t work overseas.
- Resale options: Some countries limit foreign resale, or impose additional taxes on exit.
- Political stability: From EU bureaucracy to Gulf diplomacy, policy can shift fast—especially post-Brexit.
Final verdict
- For high yield and tax freedom? Dubai is hard to beat.
- For lifestyle and steady rental growth? Portugal offers balance.
- For long-standing expat familiarity? Spain still wins hearts—but with caveats.
Before you buy abroad, speak to a qualified tax advisor and international property solicitor. What looks like a great deal on paper can come unstuck without the right planning—and the right team.
